WeWork CEO sees a robust restoration for shared workplace house
WeWork CEO SanWep Mathrani told CNBC on Friday that the office sharing company expects a strong recovery in demand as Covid vaccines help fight the pandemic.
“There will be a big shift in the return to work and we are a flex provider. So we are exactly the person who would see it first because we are plug and play,” Mathrani told Squawk Box. “” We’re seeing new activity even in New York, so we’re pretty optimistic. “
Mathrani’s comments came Friday shortly after WeWork announced its intention to go public through a reverse merger with BowX Acquisition Corp., a special-purpose acquisition company. The deal values WeWork at $ 9 billion, including debt. It is expected to close in the third quarter.
The company’s private market valuation had hit around $ 47 billion prior to the failed IPO in 2019. WeWorks’ traditional IPO plans have been postponed due to weak demand, falling valuation, and corporate governance concerns. Its co-founder and then CEO, Adam Neumann, was evicted that year.
SPACs have grown in popularity over the past year and offer an alternative way for private companies to reach the public markets. SPACs are sometimes referred to as blank check companies and raise capital through an IPO that is later used to merge with a private company to take it public.
The amount of money SPACs raised in 2021 has already exceeded all of 2020 when the wave of blank check companies began to surge. However, there have been signs that investor enthusiasm for SPACs has waned recently.
A man enters the doors of the WeWork collaborative work area in Washington, DC.
Almond Ngan | AFP | Getty Images
Mathrani, former CEO of Brookfield Properties’ retail group, said the timing of the WeWork deal made sense as the pandemic disrupted the commercial real estate market as companies were forced to work remotely.
Some companies, like Jack Dorsey’s Twitter and Square, have stated that employees will be able to work remotely permanently after the pandemic. Other companies expect hybrid agreements in the future that allow employees to work flexibly on some days in the office and on some days remotely.
This is important to WeWork, said Vivek Ranadive, chairman and co-CEO of BowX Acquisition Corp. Ranadive also owns the NBA’s Sacramento Kings and founder of Tibco Software in Silicon Valley.
“Companies have now decided that Flex Space is a must. They might want to own this space for their own headquarters, but they want to give it to a WeWork for everything else,” he said on Squawk Box. appears next to Mathrani. “Covid was actually a tailwind for the Flex Space,” added Ranadive.
According to its website, WeWork had 859 locations in 151 cities around the world as of November.
Mathrani, who became CEO in February 2020, said WeWork’s occupancy has been picking up again at its locations, especially recently. “We’re seeing green shoots today. We’ve had 33 double-digit markets in the last 60 days around the world, from Asia to America,” he said.
Under the contract with BowX, WeWork will receive approximately $ 1.3 billion in cash, including $ 800 million in a PIPE or private investment in public equity. Mathrani said the PIPE is bigger than WeWork originally expected, which shows institutional investors’ belief in a comeback.
“I think people are betting that you are effectively getting a pre-vaccination business for a post-vaccination business. They are seeing a huge rebound in the flexibility business,” he said.